Land Law

Question 1

Your client has agreed to purchase the unregistered freehold of a large farm. The seller signs and dates the transfer deed in the presence of a witness who attests the seller’s signature.

Which of the following statements best describes your client’s position in respect of the legal ownership of the farm?

1. The transfer deed is of no effect because it does not include all of the terms expressly agreed by the parties
2. The client holds the legal title but it will revert back to the seller if not registered within two months

3.The seller holds the property on trust for the client until the transfer is registered with the Land Registry

4. The transfer will not take effect at law until title is registered with the Land Registry
5. The transfer deed is of no effect because the client has not signed the document

Answer 1

The client holds the legal title but it will revert back to the seller if not registered within two months

Correct
This is correct. The transfer of the unregistered freehold has been effected by deed so the legal title passes to the client on completion, who then has two months to register the land for the first time. See ss 4, 6 and 7 Land Registration Act 2002.

Question 2

A purchaser has agreed to buy the registered freehold of a large office block. The buyer and seller both sign a document headed ‘deed’ and their signatures are attested by a witness. The document is then dated.

Which of the following statements best describes the legal position?

1. The purchaser holds the legal title to the property
2. The purported deed is defective and the purchaser has no interest in the property
3. The purported deed is defective but a contract may be construed from the failed grant
4. The purchaser holds the legal title but it will revert back to the seller if not registered within two months
5. The transfer will not take effect at law until title is registered with the Land Registry

Answer 2

5. The transfer will not take effect at law until title is registered with the Land Registry

This is the best answer. The transfer must be completed by registration to take effect at law. See LRA 2002, s27(2)(a) and s27 (1).

Question 3

A buyer and seller enter into an agreement to buy/sell a freehold estate. They enter into a document which is described as a contract for the sale of land. The document contains all the agreed terms and is signed by the seller in the presence of a witness who attests their signature.

Which of the following options correctly describes the validity of this document?

1. The document is invalid because it does not comply with the requirements for a land contract
2. The document is valid because it complies with the requirements of a valid contract for sale at law
3. The document is invalid because it has not been registered at the Land Registry yet
4. The document is valid because it complies with the requirements for a land contract
5. The document is valid because it complies with the requirements for a deed

Answer 3

The document is invalid because it does not comply with the requirements for a land contract

Correct
This is correct. A contract for the sale of land must comply with LP(MP)A 1989, s 2;

it must be in writing,
contain all the agreed terms
and be signed by both parties.
The document is not a valid contract as it has not been signed by both the buyer and the seller.

There is no valid deed as the document has not been intended as a ‘deed’ or delivered. Further, the parties are trying to enter into an contract, rather than the actual transfer of the land.

If this had been validly created, it would grant the buyer an equitable interest in the land called an ‘estate contract’.

Question 4

You act for a refuse collection and disposal company. who recently entered into negotiations with Waste Limited, the owner of a landfill site. Waste Limited has offered your client the opportunity to use the site. The first offer is a 12-month licence to use the site for a payment of £200,000. The second (alternative) offer is the grant of a 12-month lease of a specified part of the site for a payment of £225,000. In either case the maximum amount of refuse that your client may deposit is 25 metric tonnes.

Which of the following options is the best advice to your client as to which offer they should accept?

Your client should accept the lease because it will entitle R to sue for breach of contract should Waste Limited breach the terms

Your client should accept the lease because it would give it a personal right in the land

Your client should accept the licence because it would give it a proprietary right in the land

Your client should accept the lease because it would enable it to recover use of the right to use the site if Waste Limited subsequently tried to revoke the right.

Your client should accept the licence because it is capable of being enforced against third parties should Waste Limited sell the site

Answer 4

Incorrect
Your client should accept the lease because it will entitle R to sue for breach of contract should Waste Limited breach the terms

This is incorrect. Although it is correct to say that the lease would entitle your client to sue for breach of contract if Waste Limited breaches the terms, it is not the reason your client should accept the lease. Revisit your understanding of the nature and distinction between personal / proprietary rights in the land.

CORRECT
Your client should accept the lease because it would enable it to recover use of the right to use the site if Waste Limited subsequently tried to revoke the right.

Correct
This is correct. A lease is a proprietary right in the land. This means it is enforceable in rem, the right can be recovered. A licence is a personal right, which means the right cannot be recovered if Waste subsequently tried to revoke it, because a personal right is enforceable in personam.

Question 5

You act for the sole buyer of a registered freehold estate. The seller’s solicitor sends you the agreed sale transfer documents prior to exchange and completion of the transaction.

The first document is labelled ‘Contract for Sale’. The second document is labelled ‘TR1’.

Which of the following options correctly describes the legal position about the execution of these documents by your client in order to validly transfer legal title to your client?

Both documents must be executed by your client in the presence of a witness who must attest their signature.

The first document needs to be signed underhand by your client. It does not need witnessing. The second document needs to be signed by your client in the presence of a witness who must attest their signature.

Both documents need only be signed underhand by your client. They do not need to get their signature witnesses.

The first document needs to be signed underhand by your client. It does not need witnessing. The second document does not need to be signed by your client.

The first document needs to be signed by your client in the presence of a witness who must attest their signature. The second document needs to be signed underhand by your client. It does not need witnessing.

Answer 5

The first document needs to be signed underhand by your client. It does not need witnessing. The second document does not need to be signed by your client.

Correct
This correctly the legal position. The first document is a contract - it needs to comply with LP(MP)A 1989, s 2 i.e. be in writing, contain all the terms and be signed by both the parties. The buyer and seller’s signatures do not need witnessing, and the parties can sign duplicate contracts, which are then physically exchanged.

The TR1 is a transfer deed. It must comply with LP(MP)A 1989, s 1 i.e. be intended as a deed, signed by the seller in the presence of a witness who attests their signatures and be delivered. To effect a legal transfer of the land, it is not necessary for the buyer to execute the TR1. In practice, the buyer will execute the TR1 if they are entering into any freehold covenants or making a declaration of trust. However, this does not apply on the facts.

Question 6

A landlord and tenant enter into contract for lease. They enter into a written document, which they both sign. The contract contains all the terms by reference to the agreed form of lease.

Which of the following options correctly describes the validity of this document?

The document is valid because it complies with the requirements for a land contract

The document is valid because it complies with the requirements of a valid contract for sale at law

The document is invalid because it does not comply with the requirements for a land contract

The document is invalid because it has not been registered at the Land Registry yet

The document is valid because it complies with the requirements for a deed

Answer 6

The document is valid because it complies with the requirements for a land contract

Correct
This is correct. A land contract must comply with LP(MP)A 1989, s 2; it must be in writing, contain all the agreed terms and be signed by both parties. The document is a valid contract as it complies with all these requirements. Incorporation of all the agreed terms can be by reference, which is common practice, and has occurred here.

This contract for lease grants the tenant an equitable interest in the land called an ‘estate contract’.

There is no valid deed as the document has not been intended as a ‘deed’ or delivered. Further, the parties are trying to enter into an contract, rather than the actual transfer of the land.

Question 7

R is a refuse collection and disposal company who recently entered into negotiations with W, the owner of a landfill site. W has offered R the opportunity to use the site. The first offer is a 12-month licence to use the site for a payment of £200,000. The second (alternative) offer is the grant of a 12-month lease of a specified part of the site for a payment of £225,000. In either case the maximum amount of refuse that R may deposit is 25 metric tonnes. Which of the following options correctly explains whether R should accept the lease or licence?

1. R should accept the lease because it will entitle R to sue for breach of contract should W breach the terms
2. R should accept the lease because it would enable R to recover use of the right to use the site if W subsequently tried to revoke the right.
3. R should accept the licence because it would give R a proprietary right in the land
4. R should accept the lease because it would give R a personal right in the land
5. R should accept the licence because it is capable of being enforced against third parties should W sell the site

Question 8

Last year, B granted to A a legal mortgage over B’s business premise to secure a capital and interest repayment loan. The mortgage deed did not mention any power of sale for A. B’s business is declining and B has not made any mortgage payments for four months. Today, B received a letter from A stating that A intends to sell the property and recover the money due from the sale proceeds.

Which of the following statements is correct?

A may sell B’s property as the power has arisen under LPA 1925, s 101, and is exercisable as some interest has been in arrears for at least two months

The Lender cannot sell the property as three months must pass after the letter warning of the sale has been received

A may sell the property as LPA 1925, s 101 gives A the right to sell as soon as mortgage money is due.

The Lender may sell the property as the legal date for redemption has passed

A cannot sell B’s property as the mortgage deed contained no express right for A to do so

Answer 8

A may sell B’s property as the power has arisen under LPA 1925, s 101, and is exercisable as some interest has been in arrears for at least two months

This is correct: if there is no express provision in a mortgage deed (as here) then the statutory provisions in LPA 1925 apply. The right has arisen as one instalment of capital became due as soon as one payment had been missed: Payne v Cardiff; and the right is exercisable as some interest has been in arrears for two months: LPA 1925, s 103(ii).

Question 9

C is the owner of a cottage. D who lives on a neighbouring farm causes their drone to hover above, and fly over and around, the cottage – at varying heights. On the occasions when the drone is only a few metres above ground level it agitates C’s dogs, causing them to howl and bark.

Which of the following correctly explains whether D is trespassing on C’s land?

D is trespassing because damage is being caused as the dogs are agitated by the drone

D is not trespassing because the drone is not physically touching or damaging C’s land

D is trespassing because the drone is flying in the lower airspace above C’s land

D is trespassing because a landowner owners everything up to the sky and down to the centre of the earth

D is not trespassing because the drone is flying in the upper airspace above C’s land

Answer 9

Correct
This is correct. The drone is trespassing on C’ s land. C is entitled to damages. It does not matter that the drone has not caused physical damage. There is a very old principle that a landowner owns everything up to the sky and down to the centre of the earth. However, the common law distinguishes between the lower airspace (to which a landowner has a right in) and the upper airspace (to which a landowner has no right). Where the lower airspace is intruded upon or invaded in some way, the landowner may be able to bring an action for trespass irrespective of whether any damage has been caused. Examples include: cranes used for construction on adjacent land and advertising signs. Therefore, the drone flying only a few metres above the ground of C’s land would be classed as being in the lower airspace.

Question 10

Last year, B granted to A a legal mortgage over B’s business premise to secure a capital and interest repayment loan. The mortgage deed did not mention any power of sale for A. B’s business is declining and B has not made any mortgage payments for four months. Today, B received a letter from A stating that A intends to sell the property and recover the money due from the sale proceeds.

Which of the following statements is correct?

A cannot sell B’s property as the mortgage deed contained no express right for A to do so

A may sell the property as LPA 1925, s 101 gives A the right to sell as soon as mortgage money is due.

The Lender cannot sell the property as three months must pass after the letter warning of the sale has been received

The Lender may sell the property as the legal date for redemption has passed

A may sell B’s property as the power has arisen under LPA 1925, s 101, and is exercisable as some interest has been in arrears for at least two months

Answer 10

Correct
This is correct: if there is no express provision in a mortgage deed (as here) then the statutory provisions in LPA 1925 apply. The right has arisen as one instalment of capital became due as soon as one payment had been missed: Payne v Cardiff; and the right is exercisable as some interest has been in arrears for two months: LPA 1925, s 103(ii).

Question 11

A lender loans money to a borrower in return for a charge by way of legal mortgage over the borrower’s registered land. The interest rate for the loan is 10% above the Bank of England’s base rate.

Which of the following statements best sets out the circumstances in which the interest rate is most likely to be held to be unconscionable?

The land is a freehold estate, the borrower is a residential owner and has also received legal advice.

The land is a leasehold estate, the borrower is a commercial tenant and has also received legal advice.

The land is a freehold estate, the borrower is a commercial owner and both lender and borrower are individuals.

The land is a leasehold estate, the borrower is a residential tenant and the loan is to pay for the extension of the leasehold term.

The land is a freehold estate, the borrower is a residential owner and the loan is to fund the borrower’s business expansion.

Answer 11

The land is a leasehold estate, the borrower is a residential tenant and the loan is to pay for the extension of the leasehold term.

Correct
This is correct and the facts are akin to the case of Cityland v Dabrah (1968). As with this case, if the property is a leasehold and the borrower is a residential tenant who needs the money to extend the length of the lease, there is a risk that the lender could take advantage of the borrower’s circumstances and impose a higher interest rate. The borrower is more likely to agree to unconscionable terms to ensure the loan is made.

Question 12

The owner of a registered freehold property, used as a venue for weddings and parties, grants a legal mortgage over the property in favour of a lender as security for a loan. The mortgage deed contains the following terms:

(i) the lender may use the property free of charge for their annual Christmas party until the end of the mortgage term; and

(ii) the lender has an option to purchase the freehold until the end of the mortgage term.

Which of the following statements is correct in respect of the validity of the mortgage terms?

Term (i) is an unenforceable collateral advantage but term (ii) is likely to be upheld by a court.

Term (i) and term (ii) are both enforceable terms and likely to be upheld by a court.

Term (i) and term (ii) are both unenforceable terms and likely to be rewritten by a court.

Term (i) and term (ii) are both unenforceable terms and likely to be struck out by a court.

Term (i) is an enforceable collateral advantage but term (ii) is inconsistent with the right to redeem the mortgage.

Answer 12

Term (i) is an enforceable collateral advantage but term (ii) is inconsistent with the right to redeem the mortgage.

Correct
This is correct.

Term (i) is a collateral advantage but as it expires at the end of the mortgage term and as long as it is not onerous or in the nature of a penalty, it will be upheld by the court as in the case of Biggs v Hoddinott.

Term (ii) gives the lender the option to purchase the freehold at any time during the term and is likely to be struck out as in the case of Samuel v Jarrah Timber and Wood Paving Corporation Limited.

Question 13

Which of the following statements best sets out the circumstances in which the interest rate is most likely to be held to be unconscionable?

The land is a freehold estate, the borrower is a residential owner and the loan is to fund the borrower’s business expansion.

The land is a freehold estate, the borrower is a commercial owner and both lender and borrower are individuals.

The land is a freehold estate, the borrower is a residential owner and has also received legal advice.

The land is a leasehold estate, the borrower is a residential tenant and the loan is to pay for the extension of the leasehold term.

The land is a leasehold estate, the borrower is a commercial tenant and has also received legal advice.

Answer 13

The land is a leasehold estate, the borrower is a residential tenant and the loan is to pay for the extension of the leasehold term.

Question 14

A borrower and lender enter into a document, which is described as a ‘mortgage deed’. The document purports to grant a mortgage over the borrower’s registered legal freehold. The agreement is signed by both the borrower and lender, witnessed and then dated. The lender does not do anything further with the document.

Which of the following options best describes what kind of mortgage (if any) has been granted by the borrower?

The borrower has not granted a mortgage because the document does not comply with the statutory requirements of a deed.

The borrower has granted an equitable mortgage. Equity will recognise the ‘failed legal mortgage’ as a ‘contract to grant a legal mortgage’.

The borrower has granted a legal mortgage because the statutory requirements of a deed have been met.

The borrower has not granted a mortgage because the document has not been registered.

The borrower has granted an equitable mortgage because it is a mortgage of an equitable interest in the land.

Answer 14

Correct
This is correct. Although a valid deed has been created on the facts - the document complies with LP(MP)A 1989, s 1 - it has not been registered by the lender. No valid legal mortgage has therefore been created on the facts. Equity will, however, recognise this an equitable mortgage in the circumstances. The document complies with LP(MP)A 1989, s 2 and equity will therefore recognise it as a ‘contract to grant a legal mortgage’. An equitable mortgage does not need to be registered to be validly created.

Question 15

A landowner owns the freehold of a large property. The self-contained basement flat is rented to a tenant under a 3 year lease. In the lease, the tenant is granted a right to use the landowner’s garden shed to store bikes. The tenant’s bikes take up all of the space in the shed. As the bikes are expensive, the tenant secures the shed with a padlock, which the landowner does not have a key for.

Which of the following statements best explains why the right to store is not capable of being an easement?

The right is not capable of being an easement because the right is negative and the court is not prepared to recognise new negative easements

The right is not capable of being an easement because it does not touch and concern the dominant land

The right is not capable of being an easement because the servient land owner is not left with any reasonable use of the shed

The right is not capable of being an easement because permission must be sought by the dominant land owner to exercise the right

The right is not capable of being an easement because there is no diversity of ownership

Question 16

A freeholder owns the freehold of a large property and garden. 6 years ago the freeholder let the top floor flat to a tenant under a 5 year legal lease. After moving in, the tenant asked the freeholder to use part of the garden to grow vegetables and relax in. The freeholder agreed. Last year, the 5 year lease expired and a new 5 year legal lease was granted on exactly the same terms as the previous one. There was no reference to the right to use the garden.

Which of the below statements best explains whether the tenant has acquired an easement to use the garden?

The tenant has not acquired an easement because the top floor flat can be used for residential purposes without use of the garden

The tenant has acquired an easement impliedly under s.62 of the Law of Property Act 1925

The tenant has not acquired an easement because this is a reservation and the right to use the garden is not necessary to access the top floor flat

The tenant has acquired an express legal easement under the new 5 year lease

The tenant has acquired an easement impliedly under the rule in Wheeldon v Burrows (1879)

Answer 16

Correct
This is correct. the tenant has acquired an easement impliedly under s.62 of the Law of Property Act 1925. On the grant of the second 5 year lease, the informal permission to use the garden is upgraded to an easement and implied into this lease. The facts are similar to Wright v Macadam [1949] 2 KB 744, which demonstrates this mode of acquisition.

An easement can be acquired expressly or impliedly. You should consider first if there has been express acquisition – is the easement written down and does it comply with the necessary formalities? If not, consider if the circumstances mean the easement could have been acquired impliedly by one of the recognised modes. Certain modes of implied acquisition only apply if it is a grant, rather than a reservation, situation. It is therefore important that you understand not only the different modes of acquisition, but also the distinction between reservation and grant.

Question 17

A man and a woman are adjoining land owners. The man has told the woman that it plans to build a large extension at the back of its house. The woman is very concerned that this will block the sun to her garden and make it very dark.

Can the women claim an easement in respect of the man’s land that could stop the extension from being built?

The woman can claim an easement of light which the proposed extension would block

The woman can claim an easement of light because it is a recognised negative easement

The woman cannot claim an easement of light as the court will not recognise new negative easements

The woman cannot claim an easement of light as there is no defined aperture in a garden

The woman cannot claim and easement as there is no such thing as a right to a view

Answer 17

The woman cannot claim an easement of light as there is no defined aperture in a garden

Correct
This is correct. A right to light is one of a few recognised negative easements - it is not a ‘new’ negative easement, which the court will not recognise.

However, there is no general right to light. A right to light is an easement that gives a landowner the right to receive light through defined apertures in buildings or on their land. There is not a defined aperture in the woman’s garden to through which the right to light could be claimed on the facts, the women is just trying to claim a general right.

Question 18

A landlord was the registered freehold proprietor of two adjoining plots of land. Fifteen years ago, the landlord made a valid contract with a tenant in which it agreed to grant a 20-year legal lease of the southern plot (commencing on the date of the contract). The contract stipulated that the tenant was to use the southern plot for a specified purpose.

Immediately the contract was made, the landlord and tenant appreciated that the tenant could only use the southern plot for the specified purpose if the tenant was able to park a car on the northern plot.

The landlord, who had retained possession of the northern plot, told the tenant that it could park a car on that plot. The tenant has parked a car on the northern plot for the past 15 years.

Which one of the following statements is a correct description of the tenant’s right to park on the northern plot?

The tenant can park their car by reason of an express equitable easement.

The tenant can park their car by reason of an implied equitable easement.

The tenant can park their car by reason of an implied legal easement.

The tenant can park their car by reason of an express legal easement.

The tenant can park their car by reason of a prescriptive easement.

Answer 18

The tenant can park their car by reason of an implied equitable easement.
Correct
This is the correct answer. Where an estate is transferred or granted to a person for a particular purpose, and that purpose can only be realised if the transferee or grantee can exercise an easement over land retained by the transferor or grantor, that easement will be implied by reason of common intention: Wong v Beaumont [1965] and Donovan v Rana [2014] EWCA Civ 99.

Since the tenant can only use the southern plot for the specified purpose if it is able to park on the northern plot, an easement of parking will be implied.

Implied easements derive their legal or equitable status from the transaction into which they are implied. Since the tenant acquired an equitable lease (arising by reason of the specifically enforceable contract to grant a lease: R v Tower Hamlets LBC ex parte Von Goetz [1999] QB 1019), any easements implied into that lease would be equitable.

Question 19

A farmer owns the freehold of a farm. Five years ago the farmer leased out the southern part of the farm to a tenant under a four year legal lease. The farmer retained the northern part of the farm to live in. During the lease, the farmer continued to use the drains which serve the northern part of the farm and run under the southern part of the farm leased to the tenant.

Last year, the four year lease expired. The farmer granted the tenant a new four year legal lease on exactly the same terms as the previous one. There was no reference to the right to use the drains.

Which of the following statements best explains whether the farmer has acquired an easement to use the drains?

The farmer has not acquired an easement.

The farmer has acquired an easement impliedly under s.62 Law of Property Act 1925.

The farmer has acquired an easement impliedly by common intention.

The farmer has acquired an easement impliedly by necessity.

The farmer has acquired an easement impliedly under the rule in Wheeldon v Burrows.

Answer 19

The farmer has not acquired an easement.

Correct
This is correct. This is an attempted reservation. There is no mention of the right to use the drains in the lease, so it cannot be an express easement.
The only methods of implied acquisition available for reservations are: necessity and common intention. Necessity will not apply - necessity is only applicable to rights of way where there is no other means of access to the land. The courts will only allow an easement of common intention in a reservation situation if there is no other possible interpretation of the facts (Peckham v Ellison; Re Webb’s Lease). Here, the farmer can use its retained land without the drainage right and had two opportunities to reserve this right (in the first and second leases) (Yeung v Patel) so the court is unlikely to imply this reservation.

Question 20

Your client is the registered freeholder of two adjacent plots of land, Plot 1 and Plot 2. Five years ago, your client decided to keep Plot 1 but sold Plot 2 to a buyer. Both your client and the buyer signed the transfer deed which contained the following provision:

“the buyer covenants on behalf of itself and its successors in title not to use Plot 2 for any purpose other than as a private dwelling house.”

Last month your client sold Plot 1 to a new owner. Which of the following statements best explains how the benefit of the covenant has passed to the new owner in equity?

The benefit has passed by statutory annexation

The benefit has passed under a scheme of development

The benefit has passed by express annexation

The benefit has passed by express assignment

The benefit has passed by implied assignment

Answer 20

The benefit has passed by statutory annexation

Correct
This is the best answer. Section 78(1) Law of Property Act 1925 serves to annex the benefit of the covenant, as long as the parties have not expressly excluded s78, which there is no indication of on the facts.

The other answers are incorrect because there is no evidence that your client assigned the benefit of the covenant to the new owner; the wording of the covenant relates to the burden rather than the benefit so there was no express annexation and there is no evidence of a scheme of development. Further, implied assignment is not a means of passing the benefit in equity, it is a means of passing the benefit at common law.

Question 21

A man was the owner of two adjoining registered freehold properties, one called House 1 and one called House 2.

Three years ago, the man sold House 2 to a woman. The woman covenanted in the transfer deed with the intention of binding the land known as House 2 not to build any structure in the grounds of House 2 without the approval of the owner of House 1. The man’s solicitor did nothing to protect the covenant.

Two years ago, the woman sold House 2 to a new owner. The new owner has recently built a structure in the garden of House 2 without obtaining the man’s approval.

Which statement best explains why the burden of this covenant has failed to pass to the new owner in equity?

Answer 21

The burden of the covenant will not pass because the new owner had no notice of the covenant

Correct
This is correct. As House 2 is registered land, the man should have protected the covenant by the entry of a notice on the charges register of House 2 (s32 LRA 2002). This did not happen at the time the covenants were entered into. Therefore, the new owner, as a purchaser for valuable consideration of House 2, takes free of the unprotected covenant (s29(1) LRA 2002).

The other answers are incorrect because the covenant is actually overall negative with a positive aspect (following Powell v Hemsley) and it does touch and concern the dominant land since restricting building on your neighbour’s land will protect the view from the dominant land thereby preserving its value, quality etc. It is incorrect to assert that the dominant and servient land are not sufficiently proximate since House 1 and House 2 are adjoining properties. There is also express wording here that shows that the original parties (the man and woman) did intend the burden of this covenant to run with House 2, so it is incorrect to state that the original parties did not intend the burden to run.

Question 22

A retired lawyer purchases the registered freehold of two adjoining semi-detached townhouses. The lawyer renovates the townhouses including creating a shared underground garage for parking. This makes the properties more convenient as the nearest parking is on the next street.

The lawyer decides to live in the larger townhouse and sells the smaller townhouse to an accountant. The transfer deed contained a right for the owner of the smaller townhouse to park a car in the shared garage and the following covenant:

“to contribute 50% of the costs of maintaining the shared garage ”

After several years the accountant sells the smaller townhouse to a friend. The friend uses the shared garage but refuses to contribute to its maintenance costs.

Which of the following best describes whether the lawyer can enforce the covenant against the friend?

The covenant can be enforced against the friend because the burden of the covenant will pass under the rule in Tulk v Moxhay

The covenant can be enforced against the friend because the burden of the covenant will pass under the doctrine of mutual benefit and burden

The covenant cannot be enforced against the friend because the covenant is positive

The covenant cannot be enforced against the friend because there is no element of choice as to whether to take the mutual benefit

The covenant cannot be enforced against the friend because there is no clear link between the benefit and burden

Answer 22

The covenant can be enforced against the friend because the burden of the covenant will pass under the doctrine of mutual benefit and burden

Correct
This is correct. The covenant is likely to pass to the friend under the rule in Halsall v Brizell [1957] as there is a mutual burden (to contribute towards the maintenance costs) and benefit (use of the garage). As per Rhone v Stephens [1994], there is a correlation between the benefit and burden and the benefit and burden as conferred in the same transaction (Davies v Jones [2009]). There is a genuine choice whether to accept the benefit of the right to park (Thamesmead Town Ltd v Allotey (1998)) as the friend could park on the next street instead. This exception to the general rule that the burden will not pass at common law (Austerberry) can therefore be applied on the facts and used by the lawyer to enforce the covenant against the friend.

The rule in Tulk v Moxhay cannot be used to pass the burden of the covenant in equity as the covenant is positive.

Question 23

A landowner is the registered freeholder of a large detached house. The landowner decides to split the house into two semi-detached houses and sells one to a buyer.

The buyer covenants with the landowner “to repaint the window frames every five years using only colours approved by the landowner.”

Which of the following options best describes what type of covenant this is?

The covenant is a mixed covenant. It cannot be split and is overall positive.

The covenant is outright positive.

The covenant is a mixed covenant which can be split into two free-standing covenants; the first positive, the second negative.

The covenant is outright negative.

The covenant is a mixed covenant. It cannot be split and is overall negative.

Answer 23

The covenant is a mixed covenant. It cannot be split and is overall positive.

Correct
This is correct. Applying the ‘hand-in-pocket’ test (Haywood v Brunswick Permanent Benefit Building Society [1881] 8 QBD 403), the obligation to paint the windows requires money and time to be spent. The part of the covenant requiring the buyer to ‘only use colours approved by the landowner’ is restrictive and therefore negative - this part of the covenant can be complied with by inaction. The negative element cannot, however, stand alone and therefore Powell v Hemsley [1909] 1 Ch. 680 applies and the covenant is seen as one obligation with a condition attached. The main obligation is positive and the covenant is therefore seen as an overall positive covenant.

Question 24

A man and woman are adjoining land owners. 5 years ago, the man entered into a covenant with the woman not to keep any animals on his freehold land.

The women has granted a ten year legal lease of her land to a tenant. The man has now brought ten dogs onto his land, and their barking is keeping the tenant awake at night. The tenant wants to enforce the covenant against the man.

Which of the following options is the best advice to the tenant as to whether it can enforce the covenant against the man at common law?

The tenant will be able to enforce the covenant against the man because express assignment has occurred

The tenant will be able to enforce the covenant against the man providing the covenant is deemed to touch and concern the land

The tenant will not be able to enforce the covenant against the man as the burden of covenants cannot pass at common law

The tenant will not be able to enforce the covenant against the man as the tenant is not the freehold owner of the dominant land

The tenant will be able to enforce the covenant against the man because the burden will pass under the rule in Tulk v Moxhay

Answer 24

The tenant will be able to enforce the covenant against the man providing the covenant is deemed to touch and concern the land

Correct
This is the correct answer. Provided that the covenant is deemed to touch and concern the land, this will satisfy the rules for an implied passing of the benefit at common law under P&A Swift Investments v Combined English Stores.

The other conditions of P&A Swift will be satisfied because if there is no express wording showing an intention for the parties to pass the benefit to successors, s78 Law of Property Act 1925 will imply this intention. Further, both the covenantee and their successor will also hold legal estates in land, as the woman owned the freehold and the tenant has a legal lease. Smith & Snipes Hall Farm v River Douglas Catchment Board confirms that different estates are acceptable.

Question 25

A couple recently bought a holiday home in the Alps. In order to fund the purchase, they borrowed money from the bank and secured the loan by granting to the bank a legal mortgage over the freehold of their home in England.

Which one of the following options best describes whether the lender would have been put on notice of possible undue influence in the circumstances?

The lender would not be put on enquiry of undue influence because the loan is for the joint benefit of the couple

The lender would be put on enquiry of undue influence because there is more than one borrower

The lender would be put on enquiry of undue influence because the couple are buying a property in a different country

The lender would not be put on enquiry of undue influence because there is no relationship of trust and confidence between the couple

The lender would not be put on enquiry of undue influence because the lender has taken the necessary steps to bring home the risk of the mortgage

Answer 25

The lender would not be put on enquiry of undue influence because the loan is for the joint benefit of the couple

Correct
This is correct. The lender would not be put on enquiry of undue influence because the loan is for the joint benefit of the couple. In CIBC Mortgages plc v Pitt the House of Lords confirmed that a lender would not be put on notice that there is a risk of undue influence where a transaction is ostensibly for a couple’s joint benefit, as it is on the facts here.

Question 26

Five years ago, a business owner needed to borrow money to expand their business. The business owner granted a first legal mortgage over the registered freehold of their home to a bank as security for the loan. The ten year repayment mortgage was granted by deed, included an express power of sale and the legal date of redemption was set for one month after the mortgage was granted.

The mortgagor’s business has been struggling recently and they have been unable to pay the last three mortgage instalments.

Which of the following options represents the best advice to the lender in respect of enforcing the security?

The lender should apply for a court order to obtain possession and then sell the property. However, the mortgagor may apply to have the possession order postponed.

The lender should apply for a court order to obtain possession and then sell the property. The mortgagor will not be able to apply to have the possession order postponed.

The lender is not entitled to enforce the security on the facts.

The lender should take possession through self-help, rather than applying for a court order, and then sell the property.

The lender should appoint a receiver and initiate a debt action against the mortgagor because the power of sale has not yet arisen.

Answer 26

The lender should apply for a court order to obtain possession and then sell the property. However, the mortgagor may apply to have the possession order postponed.

Correct
This is correct and is the best answer. It is advisable for the lender to apply for an order for possession, rather than exercising self-help and it is true that the mortgagor can apply to have the possession order postponed under section 36 Administration of Justice Act 1970. The other options are less correct because possession through self-help is rarely if ever advisable with regard to residential property, the Administration of Justice Act 1970 would apply here as the mortgaged property is a dwelling, and the facts indicate that the power of sale has arisen and is exercisable (in addition to the fact that it would not make sense to appoint a receiver here).

Question 27

Last year, a business owner granted to a lender a legal mortgage over the business premises to secure a capital and interest repayment loan. The mortgage deed did not mention any power of sale for the lender. The business is declining and the owner has not made any mortgage payments for four months. Today, the owner received a letter from the lender stating that the lender intends to sell the property and recover the money due from the sale proceeds.

Which of the following statements best explains whether the lender has a right to immediately sell the property?

The lender can sell the property as the power of sale has arisen and has become exercisable on the facts

The lender cannot sell the business owner’s property as there is no express right for the lender to do so

The lender cannot sell the business owner’s property without first complying with the Pre-Action Protocol for Possession Claims 2008

The lender can sell the property as the legal date for redemption has passed

The lender cannot sell the property until three months pass after the letter warning of the sale has been received

Answer 27

The lender can sell the property as the power of sale has arisen and has become exercisable on the facts

Correct
This is correct: if there is no express power of sale in a mortgage deed (as here) then the statutory provisions in LPA 1925 apply and s 101 will give the lender such a right in a legal mortgage.

The right has arisen as one instalment of capital became due as soon as one payment had been missed: Payne v Cardiff; and the right is exercisable as some interest has been in arrears for two months: LPA 1925, s 103(ii).

As the right has become exercisable due to the missed interest repayments, there is therefore no need for the lender to serve a 3 month written warning/notice of the sale. The legal date for redemption, which is the earliest date on which the borrower can redeem the mortgage, has nothing to do with the lender’s right to sell.

Question 28

A borrower is in four months’ arrears with their mortgage loan. The lender has a mortgage over the borrower’s commercial premises.

The lender applies for a possession order with a view to exercising its power of sale. The borrower recently inherited a large sum of money and is now able to pay the outstanding arrears.

Which of the following options best explains whether the court is able to postpone the possession proceedings in the circumstances?

The court cannot postpone the possession order as the statutory jurisdiction to postpone does not apply

The court will postpone the possession order under its inherent jurisdiction to grant relief

The court cannot postpone the possession order as there is negative equity

The court will postpone the possession order as the lender has not complied with the Pre-Action Protocol for Possession Claims 2008

The court cannot postpone the possession order as the lender has exercised its right by ‘self-help’

Answer 28

The court will postpone the possession order under its inherent jurisdiction to grant relief

Correct
This is correct. As the borrower can repay all the arrears, the court has an inherent jurisdiction to grant relief from the possession order.

The lender has applied for the court order for possession and is not exercising its right by self-help on the facts. The courts statutory jurisdiction to postpone does not apply on the facts as the premises are residential. Further, there is no negative equity on the facts.

Question 29

Five years ago A Limited was granted a legal mortgage over a registered freehold property (the ‘Property’). Four years ago, B Limited was granted an equitable mortgage over the Property, which it protected by entry of a notice on the charges register of the title to the Property. Three years ago, C Limited was granted an equitable mortgage over the Property, which it did not protect by the entry of a notice on the charges register of the Property.

Today, D Limited was granted a mortgage by deed over the Property. Assuming this is then registered, which of the following options correctly describes the order of priority between the different lenders in the event of default?

A Limited, B Limited, D Limited, C Limited

C Limited, A Limited, B Limited, D Limited

B Limited, D Limited, A Limited, C Limited

D Limited, A Limited, B Limited, C Limited

A Limited, D Limited, B Limited, C Limited

Answer 29

A Limited, B Limited, D Limited, C Limited

Correct
This is correct.

A Limited has a legal mortgage. The mortgage could not be legal without it having being registered. To create a legal mortgage over registered land a deed must be used, which is then registered at the Land Registry. This will rank in priority to all subsequent dispositions over the Property.

B Limited and C Limited both have equitable mortgages over the Property. An equitable mortgage can be validly created and exist without a registration requirement. As between competing equitable mortgages, the order of creation will determine priority and if an equitable mortgage is protected by an entry in the Charges Register of the burdened land, this will not affect the order of priority as between competing equitable mortgages. However, if an equitable mortgage is protected by notice - as B Limited has done, it will mean its mortgage will rank ahead of all subsequent dispositions, including subsequent legal mortgages. This is why B Limited’s mortgage will rank ahead of D Limited’s mortgage in terms of priority.

D Limited will rank ahead of C Limited though because C Limited has not protected their equitable mortgage by notice. D Limited as a ‘purchaser for valuable consideration’, will not be bound by any unprotected interests in the land i.e. C Limited’s unprotected mortgage.

Question 30

The owner of a registered freehold property (‘the Property’) grants their neighbour, by signed writing, a right to share the use of part of their garden, until the neighbour’s own garden has been landscaped. The owner is now planning to sell the Property.

Which of the following statements best describes how the neighbour should protect the right against a purchaser of the Property?

The neighbour does not need to take action to protect the right as they have an implied legal easement overriding interest

The neighbour should substantively register the right as part of its creation.

The neighbour does not need to take action to protect the right as they have an actual occupation overriding interest.

The neighbour should protect the right by entering a restriction on the proprietorship register of the Property in order to trigger overreaching.

The neighbour should protect the right by the entry of a notice on the charges register of the Property.

Answer 30

The neighbour should protect the right by the entry of a notice on the charges register of the Property.

Correct
The neighbour has an inherently equitable easement over registered land- it is an easement for an uncertain term, so can only take effect in equity (s 1(3) LPA 1925). The easement has been properly created in accordance with s 53(1)(a) LPA 1925 and does not need to be registered in order to be validly created.

To bind a purchaser for valuable consideration, this type of easement should be protected by entering a section 32 Land Registration Act 2002 notice on the charges register of the Property.

Question 31

You act for the buyer of a registered piece of land. The sellers are a man and a woman, though only the woman is registered as the proprietor on the official copies of title. The man tells your client, on inspection of the land, that both him and the woman equally contributed to the purchase price.

What do you need to ensure happens for your client to take the land free of any interest the man has in it?

You need to ensure the purchase monies are paid to both the man and the woman because your client has actual notice of the interest.

You do not need to do anything as there are two sellers so your client will not be bound by any interest due to overreaching.

You need to check the Land Charges Registry to see if there is an entry against the woman’s name in respect of the interest. If not, your client, as a purchaser for value, will not be bound.

You need to check the charges register of the official copies of title to see if there is an entry relating to the interest. If not your client, as a purchaser for value, will not be bound.

You need to check the official copies to see if there is an entry in the proprietorship register relating to the interest. If not, you do not need to be concerned.

You need to ensure the purchase monies are paid to both the man and the woman so that overreaching occurs.

Answer 31

You need to ensure the purchase monies are paid to both the man and the woman so that overreaching occurs.

Correct
This is correct. The facts indicate that the man has an equitable interest in a trust of the land that arose impliedly due to his contribution to the purchase price. Ideally, this would be protected by the entry of a restriction in the proprietorship register to trigger overreaching. It is not clear if this has been done. Regardless, you need to ensure the purchase monies are paid to both the man and the woman otherwise your client will be bound by the equitable interest if the man is in ‘actual occupation’ of the land, which the facts indicate he might be.

Question 32

Your client is gifted a piece of registered land from their parent, which they take occupation of. The next door neighbour tells your client that it has an option to purchase the land, which is in writing and signed by both the parent and the neighbour, that it now wishes to exercise. There is no entry relating to the option in the charges register of the official copy of title.

Is your client bound by the option to purchase?

Yes, your client is bound because overreaching has not occurred on the facts

No, your client is not bound because the interest has not been protected

No, your client is not bound because the neighbour has no valid interest in the land

Yes, your client is bound under the basic rule of priority

Yes, your client is bound because the neighbour has an overriding interest in the land

Answer 32

Yes, your client is bound under the basic rule of priority

Correct
This is correct. Your client is not a purchaser for value, they are a donee - they were gifted the land. Therefore, they will be bound by the option to purchase, which is a form of estate contract.

The estate contract is an equitable interest in the land. It has been validly created as it complies with LP(MP)A 1989, s 2 - it is in writing and signed by both parties (the neighbour and the parent) and there is nothing to indicate that all the terms are not contained. An estate contract over registered land should be protected by a notice in the charges register of the burdened land (LRA 2002, s 32) otherwise it will not bind a purchaser for value. However, your client is not a purchaser for value on the fact so will still be bound (LRA 2002, s 28) under the normal rules of priority.

Question 33

A proprietor of unregistered land has today granted a lender a legal mortgage by deed. There is already a charge by way of legal mortgage over the land.

Which of the following statements best describes the legal position in respect of how this interest should be protected?

The interest does not need protecting as will be binding as an overriding interest.

The interest must be protected by a land charge to bind future purchasers for valuable consideration.

The interest does not need protecting as will be binding under the rule ‘legal interests bind the world’.

The interest must be substantively registered to bind future purchasers for valuable consideration.

The interest must be protected by a notice in the charges register of the title to bind future purchasers for valuable consideration.

Answer 33

The interest must be protected by a land charge to bind future purchasers for valuable consideration.

Correct
This is correct. You are told on the facts the land is unregistered. This is a second legal mortgage - a puisne mortgage - and must be protected by a Class C(i) land charge to bind a purchaser for valuable consideration of any interest in the land. See s2(4)(i) and s4(5) Land Charges Act 1972.

If this were a first legal mortgage over unregistered land, it would be a trigger for first registration of the land (s 4 LRA 2002).

If this second legal mortgage were granted over registered land, it would need to be substantially registered in order to take effect as a legal interest

Question 34

Your client has the benefit of a right of way for 20 years created by valid deed over adjoining land. The adjoining land is unregistered and the new owner has blocked your client from using the right of way.

Will the neighbour be bound by your client’s interest?

The right of way will be binding as an implied legal easement overriding interest

The right of way will be binding if it has been protected by land charge registered against the name of the grantor

The right of way will be binding if it has been protected by land charge registered against the name of the new owner

The right of way will be binding under the rule ‘legal interests bind the world’

The right of way will be binding if it has been protected by land charge registered against the land

Answer 34

The right of way will be binding under the rule ‘legal interests bind the world’

Correct
This is correct. A legal interest over unregistered land will be binding under the principle ‘legal interests bind the world’. We know the right of way is a legal easement because it is granted for term equivalent to a freehold or leasehold estate (20 years - a certain term) and is granted by way of valid deed.

If the easement was for an uncertain term or was granted by way of a failed deed, it could be equitable. In this situation, it would need to be protected by a land charge against the name of the grantor.

Question 35

Five friends (all aged over 18) purchase a restaurant with the intention of running it as a business. The friends contribute equally to the purchase price and the property is conveyed to all of the friends in the same document. There is no express declaration of trust and there are no words in the transfer deed as to how the property is to be held.

Which of the following statements best explains how the friends hold the property in equity?

Given the nature of the property and purpose of the purchase, there is a presumption that the friends hold the property as tenants in common

The friends can only hold the property as tenants in common as only unity of possession is present in the circumstances

There is a presumption that the friends hold the property as joint tenants as there are no words of severance

The first four of the five friends named in the transfer deed will hold the property as joint tenants

As there is no express declaration of trust, equity presumes that the friends hold the property as tenants in common

Question 36

Four people purchase a registered freehold property for use as office premises to run their architect firm. The four people hold the property as joint tenants. The equitable interest of one of the people (the ‘partner’) is subsequently mortgaged with a local bank. On examining the related paperwork, the partner notices that the mortgage contract has not been signed by the bank.

Which of the following statements best represents the legal position in respect of the partner’s equitable interest?

The partner’s equitable interest has been severed by partial alienation

All of the four people now hold an equitable interest as tenants in common, 25% each

The partner now holds a 50% interest in equity as a tenant in common

The partner’s equitable interest has not been severed as the contract has not been signed by both parties.

The partner’s equitable interest automatically vests in the bank

Question 37

Two trustees (A and B) hold property on trust for three beneficiaries in equal shares (C, D, and E), who live at the property. The property is mortgaged to a bank and the payments are up to date. E has just turned 18, and wants the property to be sold to use the share of the proceeds to take a gap year and travel the world. C and D are trainee doctors working at the local hospital and do not wish the property to be sold.

Which of the following statements best describes whether E’s application for an order for sale is likely to be successful?

E’s application for an order for sale is likely to be refused by the court because C and D oppose the sale and the combined value of their interests is greater than E’s.

E’s application for an order for sale is likely to be granted because the combined interests of E and the bank outweigh those of C and D

E’s application for an order for sale is likely to be granted because the purpose for which the property is held, as a joint home, is no longer capable of continuing.

E’s application for an order for sale is likely to be refused because the welfare of a minor who occupies the property will outweigh all other considerations.

E’s application for an order for sale is likely to be granted as the property is mortgaged and the court gives greatest weight in practice to the interests of the secured creditor.